Diageo chief grilled over Johnny Walker plant closure

Published on Wednesday 17 March 2010 14:57

MSPs have today quizzed the Scottish directors of alcohol producer Diageo over plans to cut 900 jobs and raised questions over the company's £400m advertising budget.

Appearing before the Scottish Parliament's economy, energy and tourism committee, Diageo's managing director in Scotland Bryan Donaghy rejected a link between the firm's Formula 1 sponsorship and the plan to shed staff.

Mr Donaghey said there will be no compulsory redundancies at Diageo before October and that, while 700 posts were at risk with the closure of a bottling plant at Kilmarnock and a further 200 in Glasgow, the firm is creating 400 jobs in Fife.

Mr Donaghey appeared before the committe with John Beard, chief executive of Whyte and MacKay.

Scottish National Party MSP Stewart Maxwell said: "In terms of the restructuring, how do the both of you justify to your employees that are about to lose their positions signing deals for advertising with Formula 1 teams?"

Mr Donaghey said that "advertising and promotion" was key to sales.

"Formula 1 has a great global audience. Like all things, it might work for a while, then we look at other things."

Mr Beard said: "We have to become more international and one vehicle for this is through the likes of Formula 1."

Mr Maxwell continued: "There could be a perception that it's the people in Scotland, the workforce in Scotland, which is going to suffer because of other external factors, as well as additional money going to promote the product and particularly the Indian market – ie the promotion in Formula 1."

Mr Donaghey said: "We have to look to the long term. That isn't a remedy for the people who are losing their jobs, but this is about the long-term sustainability of 4000 jobs in Scotland and the supply base that comes with it."

Mr Donaghey told the committee that 300 of the staff affected have so far said they do not want to be "redeployed" to other sites and 300 staff across the company have applied for voluntary redundancy.